Figures released Thursday showed that China's economy expanded by 11.4% in 2007, the HIGHEST in 13 years and surpassing 10% for the fifth straight year. This was led by all sectors of the economy, with exports and real estate registering a greater than 20% expansion, despite curbs in the form of tighter credit.
So what does 2008 hold? To get a flavor of what is to come, these are quotes from top China-focused analysts:
"We expect the economy's growth pace to remain largely solid in 2008 - albeit with signs of a shift in composition towards domestic demand - despite continuing tightening measures both on the domestic front and the export sector, as well as the unfolding slowdown in global demand."
"We have lowered our GDP forecast for 2008 from 11% to 10.5%. The external slowdown led by the U.S. will probably push China export growth down to below 20% ... Before the uncertainty of the U.S. subprime crisis and domestic inflation dies down, market volatility will likely stay."
"China's economy is one step away from overheating and its growth is becoming more balanced as it seemed driven increasingly by consumption rather than investments and exports ... The data, including lower CPI inflation, should at least reduce the need for more aggressive tightening in the near-term."
"Domestic demand appeared to be the main driver for growth in Q4, while the contribution from net exports decelerated significantly. We believe the underlying inflationary pressures remain significant and risks remain high that CPI inflation will rebound in the coming months."
"The trend here is encouraging. We are looking for 10.8% for the whole of 2008 ... We stay with our forecast for four 27 bps rate hikes in 2008, possibly one each for every quarter."
"Though it is fanciful to think that the Chinese consumer could emerge, on any sensible timeframe, as a meaningful offset to the U.S. consumer ... these impressive incremental gains in retail sales are important for the Chinese economy ... The slowdown in Chinese growth is likely to be orderly and balanced."
I think the consensus appears to be:
1) Moderation of economic growth, but most probably still above 10% for 2008.
2) Decline in export growth, offset to some extent by domestic consumption.
3) Volatility in the stock markets until the twin issues of inflation and subprime write-down go away.
In light of what's happening in the U.S., I would say that China in 2008 looks pretty good indeed.